Sol Melia Takes On Vacation Ownership
It may not be a household name yet in the U.S., but Sol Melia Vacation Club is a timeshare powerhouse in Europe and some parts of the western hemisphere. The unit of Spanish hotel chain Sol Melia has 15 vacation club properties in a geographic swath that extends from the Canary Islands through the Caribbean and into Mexico. So far, Sol Melia has no clubs in the U.S., even though 60 percent of its timeshare members are Americans.
The vacation club is a 50-year right-to-use product that gives members access to units on a seasonal basis at their home resorts. In addition, they can trade for time at other SMVC properties, the 350 Solia Melia Hotels & Resorts and more than 900 other affiliated properties. Members can save their vacation time from one year to the next, borrow from future vacation years or divide it into less-than-one-week increments. A sister Sol Melia unit, the Leisure Real Estate division, offers fractional and whole ownership products.
Last fall, Sol Melia hired 36-year Starwood and Sheraton veteran Denis Ebrill to lead its timeshare operations. As executive vice president of the group, the native of Ireland oversees all aspects of the business—sales and marketing, member services, financing, collections, operations, development, legal, human resources and more. We recently chatted with Ebrill to get an update on SMVC’s current operations and future development:
What is the culture of the company and how does it differ from Starwood?
In terms of the business model, there are a lot of similarities. The company is a public company quoted on the Madrid stock exchange, but it is backed by the strong family culture of the founders and family members who still run the company.
It’s down but surprisingly resilient. Business is not where it was a year ago, but that’s not surprising when you consider that people are reluctant to buy new cars and shop around for deals to replace the washing machine. While we benefit from the financing side of the business, the income generated by the receivables and the securitization, we can survive without it, and not every company in this business can say that. It does cut into our margins when the credit markets lock up and there is very little availability of attractive financing sources.
All of our operations are essentially international and many people in countries outside of the U.S., especially in Latin America and the Caribbean, have been through cycles like this more frequently than we have in the U.S. It’s not quite as alarming to them as it is to the typical person in the U.S.
What advantages does SMVC have in the marketplace?
A couple of things: We’re probably the purest mixed-use product in the industry. Every one of our vacation club resorts is connected at the hip to a hotel operation so customers know they’ll have the benefit of full hotel services and amenities during their vacations. Some standalone vacation club products don’t have quite the same levels of service.
The fact that it is mixed-use also allows us to draw down inventory on a just-in-time basis so we don’t have large amounts of unsold developer-subsidized inventory. A lot of the initial inventory consisted of hotel units that we converted to vacation club-type villa configurations. The most recent ones are more of a purpose-built model, but they remain a part of the hotel inventory until a time our sales projections indicate it’s time to start taking down more units.
This model offers distinct advantages, but it also presents challenges. We’re one of the most geographically diverse companies in the industry, doing business in Spain, the Canary Islands, Mexico and the Caribbean. Between culture, languages and exchange rates, we deal with a few variables not always present in the U.S. We’re tied to the occupancy of our hotels so we’re dependent on our ability to generate prospective vacation club customers from within the in-house hotel operations. If the hotel suffers, either in occupancy or mix of business between groups and transients or the customer profiles in terms of geographic origin or nationalities, it has a significant impact on our business.
Is in-house marketing your primary source of leads and sales?
While we’re diversifying our efforts, in-house marketing is the strongest part of our business. We have to be very protective of brand and rate integrity so as we look to diversify and possibly do some of our own promotions to generate leads, we need to be very careful to balance that need with rate integrity on the hotel side. We can’t compete directly with customers who are good prospects for the vacation club, but who are also being targeted for hotel stays. It’s a delicate balance.
Compared to some other vacation ownership companies, Sol Melia doesn’t have the name recognition in the U.S. How do you market the product to American consumers?
We offer a lot of promotional packages within the U.S. to generate some traffic into our resorts and then hopefully have the opportunity to talk to our customers once they are on-property. It’s a service-oriented approach when the customer gets to the property. The objective is to establish a relationship with the customers and then talk to them about the vacation club if and when the occasion arises.
What are your expansion plans?
Obviously, in the short term we’re being very cautious about additional growth. But long-term, there are some key locations that make a lot of sense to us. We would love to have a presence in the U.S., and one of the most desirable markets for the vacation club business is Orlando. That’s in our long-term sights. Within the European market, currently all of our vacation clubs are in the Canary Islands so having something in mainland Spain at a coastal destination would also be high on our priority.
We already have nine hotels and four vacation club resorts in Mexico so we’ve got a lot of that covered, but there are still opportunities to grow there.
Do you have operations in Cuba?
None of our vacation club products are in Cuba yet, but time will tell. I’ve always thought it was a question of time.
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